Competency-based performance management to reward top performers

Countless books and articles have been written on the subject of performance management and performance appraisal. “New and improved” systems have been launched in most companies and yet, the same cynicism and dissatisfaction exists, particularly at the employee and lower management levels.

It is a constant battle for employers to find and properly implement an efficient performance management process by which valuable and accurate data can be used to assess the true ROI and potential ROI of your workforce.

Even here, at Workitect, we have discussed the topic of performance management in several articles, supporting companies in their search for bar raisers and top performers. But what is top performance anyway? How can a manager identify and properly reward those individuals who exemplify the qualities and attributes needed to continuously increase a company’s efficiency, competitiveness and future chances of success?

Debunking the myths of performance in the workplace

One of the most common myths of performance management is that the best employees should get all the glory. After all, they not only deliver, but rewarding them gives an incentive to others.

While this strategy may help you retain your best employees, it can also create an unbalanced work environment, which could in turn lead to demotivation and high turnover rates. Remember that approximately ¾ of your workforce is made up of “average” performers; those very workers who, day in and day out, do what is asked of them. They may not exceed expectations, but they nevertheless are committed to doing what is required, and doing it well.

Neglecting to nurture or develop these individuals’ competencies so that they may derive satisfaction from their work and achieve their career objectives is the equivalent of setting roadblocks to your company’s success. A top performer may possess the will or drive to excel, but an average performer still delivers on the work that matters.

What’s more, by recognizing good performers, rather than just the top 5%, you are investing in their potential and motive to improve their performance. Your average workers may be average today, but it is your responsibility to give them the tools they need to become bar raisers.

Let’s however note that this doesn’t mean you should reward poor performers, nor that you should reward good and top performers the same. There is an important distinction to be made, but more on that later.

Step by step: understanding performance management as a behavioral tool

Performance management is much more than periodic performance appraisals; it aligns individual professional development to overall corporate results. In an interview given to Performance Management Magazine, the father of performance management, Dr. Aubrey C. Daniels, describes performance management as:

“A scientifically based, data-oriented management system [consisting] of three primary elements – measurement, feedback and positive reinforcement. Although each of these three elements can exist alone, all three must be present [implemented systematically and in sequence] before you have true Performance Management.”

In this definition, measurement refers to collected and anticipated performance data; feedback is the discussion between employer and employee on said data; and positive reinforcement is the reward or recognition of improvement in performance.

By Dr. Daniels’ definition, successful performance management takes a page out of behavioral theories, confirming the power of positive reinforcement in behavior modification. He indeed suggests that to promote a culture of top performers, companies must avoid two unfortunately all-too-common practices:

Generalized rewards, such as an extra week of vacation every 5 years of employment or an x% raise every year, as this sort of incentive program rewards good, bad and top performers equally. “The good ones will conclude that it doesn’t pay to perform well, and the poor ones will conclude that it does pay to perform poorly. After a while, the extra week will just be taken for granted anyway.”

Negative reinforcement – “No one works up to his/her potential unless he or she is positively motivated. For example, if you threaten an employee with being fired, chances are he’ll do just enough to keep his job, but no more. And, if jobs are plentiful, he might pull a Johnny Paycheck and tell you to “take this job and shove it.”

So what should a performance manager do to promote performance? Reward good performers with something (tangible or not) that is meaningful to them and 100% contingent on improved performance. Once again, understanding your employees’ motives to performance is a crucial tool in adapting your performance management reward system to yield the right results. Employers should make good use of the feedback session with their employees to understand their drive in the workplace – not just to read and explain the comments on the performance appraisal review.

Remember that not everyone aspires to become a leader. Success is subjective, and assuming that you can motivate your team simply by dangling the reward or promotion carrot is ludicrous. To succeed, a person must not only want to, but he/she must also be motivated to invest in developing the competencies that matter. In other words, if you want top performers, you need to know your team and give them the tools to succeed in accordance with their individual motives.

Measurement: It all goes (down or up)hill from here!

If finding the right reward is important to the success of your performance management system, identifying the right behaviors is even more crucial to the process. If you have difficulty recognizing good or outstanding performance from average or poor performance, even the best performance management system cannot be sustained efficiently.

Some organizations have found that managers should be evaluating employee behaviors and competencies demonstrated, in addition to organizational results achieved. Just as acquired skills and education cannot predict a person’s performance in a given job role, vague or subjective measurement points cannot support a healthy and future-oriented performance management process.

In an article published last month, we mentioned that one of the most common flaws of performance appraisals is that they focus on evaluating workers’ quantitative output, rather than their competencies and potential for outstanding performance. By focusing on purely quantitative results achieved (e.g., number of sales, revenue generated, etc.), you are overlooking several other elements of performance (e.g., leadership, team work, availability, etc) that may be impacting your business more than you think.

Many organizations shy away from a competency-based performance management system simply because it is easier to hold employees accountable for hitting or missing quantitative targets, rather than attempting to measure their qualitative input and planning for their future development. In a way, companies primarily use performance management to determine compensation and meet certain professional development targets, rather than using them as strategies to create bar raisers.

There are several guidelines for effective performance management, but the human factor is critical. Once you lose sight of the fact that you are dealing with individuals, each of whom have personal goals, interests, motives and competencies, evolving over time, no matter how brilliant your performance management process, you are bound to continue experiencing the same results.

Ed is President of Workitect, Inc. and has over forty years of experience helping companies effectively utilize their organizational and human resources. His experience includes senior consultant roles with Achieve Global and Hay/McBer. Workitect is the leader in competency-modeling and competency-based talent management.